Wool Services full-year profit slips 66% as prices tumble
BUSINESSDESK: New Zealand Wool Services International, the wool scouring and exporting business whose majority shareholding is up for grabs, posted a 66% drop in full-year profit as wool prices tumbled.
Profit was $2.2 million in the 12 months ended June 30, from a record $6.6 million a year earlier, when wool prices surged in the face of global demand and a supply shortage. Sales rose 0.9% to $202 million.
The company warned last month that profit would miss its guidance because of a "sharp" decline in wool prices in April to June and what it called "unprecedented high volumes" offered in July.
It also has been forced to cope with a stubbornly high New Zealand dollar, which erodes the value of export sales.
Reduced consumer demand in Europe, particularly for floor covering, a fall in China's textile industry and a drop in the consumption of carpet wool in Australia also contributed to the profit decline, WSI said today.
"The market outlook for wool depends largely on the performance of wool markets, and as such remains uncertain. We remain positive despite the international downturn.
"This confidence is evidenced by recent wool sales where prices have shown a firming tendency."
Improvements to WSI Kaputone Wool Scour over the next 12 months will also help "improve processing profits" to "achieve a satisfactory full 12-month result – better than the year under review," it says.
A 64% stake in WSI is up for grabs because it was owned by the Allan Hubbard-related companies Plum Duff and Woolpak Holdings, which are in receivership.
WSI's scouring assets attracted Cavalier Wool Holdings, a joint venture between carpet-maker Cavalier Corp, Accident Compensation Corp and Direct Capital Investments, which wants to create a national monopoly on scouring and has received sign-off from the anti-trust regulator.
WSI shares were unchanged at 37 cents and have shed 26% this year. The company did not declare a final dividend.